Exhibit 10.40
MARKETING AND SUPPORT SERVICES AGREEMENT
THIS MARKETING AND SUPPORT SERVICES AGREEMENT (this "Agreement") is
made as of the 28th day of June 2002, by and between Nationwide Financial
Services, Inc., a Delaware corporation ("NFS") and Gartmore Global Investments,
Inc., a Delaware corporation ("GGI").
RECITALS
A. NFS and certain investment advisory affiliates of GGI are
parties to the Fund Agreements listed on SCHEDULE A attached
hereto (collectively, the "Fund Agreements") governing the
sale, distribution and administration of certain GGI Products
(as defined below).
B. In connection with the reorganization of GGI and the
transactions contemplated by that certain Exchange Agreement,
dated May 22, 2002 by and between NFS and Nationwide
Corporation (the "Exchange Agreement"), NFS and GGI wish to
continue their strategic alliance and codify their existing
operating arrangement with respect to the marketing and sale
of the investment products listed on SCHEDULE B attached
hereto sponsored by investment advisory affiliates of GGI
(collectively, the "GGI Products").
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants set forth herein, and other good and valuable consideration the
receipt and sufficiency of which hereby are acknowledged, the parties agree as
follows:
Section 1. ENGAGEMENT. GGI has engaged NFS, on behalf of its investment
advisory affiliates, including, but not limited to, Gartmore Mutual Fund Capital
Trust, Gartmore SA Capital Trust, Gartmore Global Asset Management Trust,
Gartmore Xxxxxx Capital Management, Inc., NorthPointe Capital LLC and Gartmore
Global Partners, and NFS has agreed to market the GGI Products in accordance
with the terms and conditions of this Agreement.
Section 2. RELATIONSHIP REVIEWS. Representatives of NFS and GGI agree
to participate in periodic management meetings, to be held not less than
semi-annually ("Review Meetings"), to review the strategic alliance between the
parties, the performance of the GGI Products and the services being provided by
NFS to GGI pursuant to this Agreement. The Review Meetings shall also include,
but are not limited to, (a) a review of NFS' and GGI's business plans; (b) a
review of NFS and GGI new product initiatives and/or development; (c) an
analysis of specific investment performance and expense issues relating to the
GGI Products; (d) sub-advisory selection and oversight; and (e) the
establishment of a performance monitoring process, including the development of
a "watch list" and any performance recovery plans for all sub-advised funds
included in the GGI Products.
Section 3. MARKETING AND SUPPORT SERVICE FEES.
(a) In addition to all service and maintenance fees to be paid by GGI
or any affiliate of GGI to NFS pursuant to the Fund Agreements, GGI shall pay
NFS an annual fee of Four Million Dollars ($4,000,000) in exchange for the
services provided by NFS pursuant to this Agreement, payable in calendar
quarterly installments of One Million Dollars ($1,000,000) each. Except as
otherwise provided in the Agreement, GGI shall pay NFS the quarterly
installments within forty-five (45) days following the close of each calendar
quarter.
(b) GGI shall also reimburse NFS for all (i) material out-of-pocket
costs or charges reasonably incurred by NFS relating to the GGI Products at the
prior written direction of GGI or a duly authorized officer of GGI, including,
but not limited to revisions to NFS marketing materials, variable annuity/life
contracts, prospectuses or other similar product offering documents resulting
from out-of-cycle changes initiated or requested by GGI; (ii) systems-related
expenses associated with the provision of interfaces, special reports and
services mutually agreed to by GGI and NFS; and (iii) other out-of-pocket
expenses incurred by NFS at the prior written direction of GGI or a duly
authorized officer of GGI (hereinafter referred to as "Out-of-Pocket Expenses").
NFS shall supply GGI an invoice each quarter of all such Out-of-Pocket expenses,
and shall be paid within forty-five (45) days of the receipt of NFS' invoice.
(c) GGI will be treated in a fair and equitable manner and on a
substantially similar basis as any other product partner regarding the payment
of similar Out-of-Pocket Expenses and marketing and support service fees.
Section 4. INCLUSION OF GGI PRODUCTS AS INVESTMENT OPTIONS IN NFS
PRODUCT MENUS AND PLATFORMS.
(a) EXISTING PRODUCT MENUS AND PLATFORMS. NFS will maintain the current
level of product representation provided to the GGI Products on NFS' investment
product menus and platforms in effect as of the date of this Agreement, as
listed on Schedule B.
(b) FUTURE PRODUCT MENUS AND PLATFORMS. For new NFS product menus and
platforms that come into effect after the date of this Agreement, the level of
product representation provided to the GGI Products will be based upon (i) the
overall product design with specific consideration being given to (1) the number
of product options to be included in the menu and platforms and (2) NFS' ability
to develop and maintain competitive products; and (ii) the satisfaction of any
specific investment product menu and platform requirements applied in a fair and
equitable manner. GGI will receive fair and equitable participation on the
selection list of any proprietary menus that are developed after the date of
this Agreement by NFS.
Furthermore, GGI shall be the sole provider of 1940 Act registered
sub-advised insurance series trust products to NFS, except to the extent other
product partners already have been allotted shelf space as of the date of this
Agreement or otherwise inconsistent with the terms and conditions of this
Agreement.
(c) Notwithstanding Sections 4(a) and (b), GGI understands and agrees
that the products to be included in NFS' investment product menus and platforms
are in support of NFS' effort to develop and maintain a competitive market
position with respect to the products included in the menus and platforms.
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Section 5. PRODUCT MENU AND PLATFORM EXCLUSIVITY AND PREFERRED STATUS.
(a) LIMITED EXCLUSIVITY. Except where other product partners already
have been allotted shelf space in substantially the same type of product prior
to the date of this Agreement, GGI shall maintain its current exclusive menu
status on the existing NFS product menus and platforms for a period of one (1)
year following the date of this Agreement for the following products:
(i) Sector Funds - Healthcare and Financials;
(ii) International Fund - Emerging Markets Equity; and
(iii) Focus Funds - U.S. Growth Leaders, Nationwide
Leaders, Worldwide Leaders, and U.S. Value Leaders.
Any new GGI Sector, International or Focus funds accepted by NFS into
the NFS product menus and platforms shall be granted exclusivity for a period of
one (1) year following the date that such products become available for
distribution. Notwithstanding this provision, the Limited Exclusivity for any of
the noted Sector, International and Focus Funds is subject to maintaining
satisfactory investment performance.
(b) PREFERRED STATUS. Assuming satisfactory investment performance is
maintained, GGI will also be the sole provider of the following products to NFS
(except where other product partners already have been allotted shelf space as
of the date of this Agreement):
(i) Money market funds or substantially similar
replacement products as market demand dictates -
assuming GGI can manufacture a competitive
replacement product;
(ii) Index mutual funds;
(iii) Fixed income funds and, in particular, the Government
Bond and Separate Account derivatives of that
product. For Stable Value Funds, it is understood
that a GGI/NFS management group will resolve issues
related to the use of GGI's Stable Value products in
the NFS menu by December 31, 2002; and
(iv) Asset allocation funds solutions, including the
Current Investor Destination Series or competitive
substitute products.
(c) Notwithstanding anything to the contrary contained in this
Agreement, GGI understands and agrees that NFS will be solely responsible for
the management and oversight of Provident Mutual Life Insurance Company's "All
Pro" Separate Account Funds, including the conversion of these funds into bank
collective funds.
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Section 6. SELECTION AND/OR REPLACEMENT OF SUB-ADVISORS.
(a) SELECTION AND REPLACEMENT CRITERIA. GGI agrees to use its best
efforts to consider the following criteria, among other factors, when selecting
and/or replacing sub-advisors for a GGI Product:
(i) Maintain current NFS sub-advisor relationships,
(ii) Preference to current strategic product partners for
new opportunities,
(iii) Branding, marketing and sales support,
(iv) Ability to raise significant assets,
(v) Scalability,
(vi) Investment performance versus recognized peer group
and benchmark,
(vii) Style purity, and
(viii) The potential impact on NFS distribution
opportunities.
(b) CONSULTATION WITH NFS. GGI shall not recommend a change of any
sub-advisor without consulting NFS the earlier of at least thirty- (30) days
prior to the time such changes are (i) discussed with the affected sub-advisor
or (ii) submitted to the Boards of Trustees of Gartmore Mutual Funds and
Gartmore Variable Insurance Trust, or any future registered investment company
managed by GGI or its investment advisory affiliates (the "Fund Boards").
(c) Notwithstanding Sections 6(a) and (b), NFS understands and agrees
that the selection or replacement of sub advisors for a GGI Product shall be
determined in the sole discretion of GGI and the Fund Boards.
Section 7. PRICING. GGI shall not materially modify any of its
investment advisory or sub advisory fees and/or expenses for a GGI Product
without consulting NFS the earlier of at least thirty- (30) days prior to the
time any such fees and/or expense changes are (i) discussed with the affected
service provider, including any sub-adviser, or (ii) submitted to the Fund
Boards. If there is a MATERIAL fee and/or expense increase on any GGI Products,
NFS shall have the ability to replace the affected GGI with a substantially
similar Product having lower fee and/or expense options.
Section 8. SERVICES PROVIDED BY NFS.
(a) In addition to the services provided under the Fund Agreements, NFS
shall also provide the following assistance and support services with respect to
the GGI Products:
(1) access by GGI to GGI fund information in the NFS sales
databases;
(2) annuity fund sales reporting by the firm, specifically
excluding confidential end client data (e.g., name and social security
numbers); and
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(3) otherwise cooperate with and assist GGI in the marketing and
sale of the GGI Products as reasonably requested by GGI.
(b) NFS further agrees to support GGI's payment of commissions to NFS'
wholesalers for sales of the GGI annuity products and shall sponsor sales
contests for GGI Products.
Section 9. MARKETING AND PROMOTIONAL MATERIALS. NFS shall develop and
distribute marketing and promotional materials in which the product partners'
section of such marketing materials will include those GGI Products that meet
the investment performance criteria to enter and remain on the primary product
menu. GGI will be treated in a fair and equitable manner and on a substantially
similar basis as any other product partner regarding its participation on the
fund partners' section of the NFS marketing material.
Section 10. CONFIDENTIALITY OF CLIENT RECORDS. GGI and NFS agree that
the investment records and other personal information pertaining to individual
clients of are to be kept confidential. GGI and NFS agree to comply with all
laws, rules, regulations and ordinances relating to privacy, confidentiality,
security, data security and the handling of client information currently
existing or which may from time to time be established. NFS shall take all
reasonable precautions to prevent disclosure or use of the information for any
purpose unrelated to the marketing of the GGI Products while such records are in
NFS' custody or control, unless the client consents in writing to disclosure or
use for another purpose. Without the prior written consent of GGI, NFS shall not
use GGI's client list for any purpose other than as contemplated by this
Agreement for the benefit of GGI or as required by law.
Section 11. TERM. This Agreement shall have a term of three (3) years
from the date hereof and may be renewed upon mutual agreement of the parties.
Section 12. REPRESENTATIONS.
(a) GGI represents and warrants to NFS that, as of the effective date
of this Agreement, (i) it has all power and authority to execute and deliver
this Agreement and to perform its obligations hereunder, (ii) no consent,
approval or authorization from any other party is required in connection with
GGI's execution, delivery, and performance of this Agreement, except such as
have been obtained and are in full force and effect, and (iii) the execution,
delivery and performance of this Agreement by GGI will not violate any material
law, regulation, contract, court order or ruling applicable to GGI to the best
of its knowledge.
(b) NFS represents and warrants to GGI that, as of the effective date
of this Agreement, (i) it has all power and authority to execute and deliver
this Agreement and to perform its obligations hereunder, (ii) no consent,
approval or authorization from any other party is required in connection with
NFS' execution, delivery, and performance of this Agreement, except such as have
been obtained and are in full force and effect, and (iii) the execution,
delivery and performance of this Agreement by NFS will not violate any material
law, regulation, contract, court order or ruling applicable to NFS to the best
of its knowledge.
Section 13. DISPUTE RESOLUTION.
(a) BINDING ARBITRATION. Each of the parties will make a good faith
attempt to amicably settle any disputes arising among them in connection with
this Agreement. If the
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dispute cannot be settled by the parties through negotiation within ninety (90)
days after the notice of dispute is sent in writing to the other party, the
parties agree to settle the dispute through binding mediation administered by a
committee consisting of the NFS Chief Operating Officer, the Nationwide Mutual
Insurance Company Executive Vice President-Corporate Strategy and the Gartmore
Chief Executive Officer according to such procedure as they should deem
appropriate (the "Committee"). The Committee shall resolve the dispute and shall
render its determination in writing within thirty- (30) days following its
selection pursuant to this Section 13(a). The determination of the Committee
with respect to a dispute shall be final and binding and shall not be subject to
review by any court or governmental agency or other external body.
(b) VENUE. Unless otherwise agreed to by the parties and the Committee,
the venue of any mediation pursuant to this Section 13 shall be Columbus, Ohio.
Section 14. COMPLIANCE WITH APPLICABLE LAWS. Nothing in this Agreement
shall be deemed to require any arrangement or action by either NFS or GGI that
would violate or contravene any applicable law, rule, regulation or ordinance
applicable to NFS or GGI, including without limitation the Investment Company
Act of 1940 (the "1940 Act"), the Investment Advisers Act of 1940 (the "Advisers
Act"), and Xxxxx-Xxxxx-Xxxxxx Act.
Section 15. GOVERNING LAW. This contract shall be governed by and
construed under the internal, substantive laws of the State of Ohio and in
accordance with the 1940 Act and the Advisers Act. In case of any conflict
between the laws of the State of Ohio and the 1940 Act or the Advisers Act
(collectively, the "Acts"), the provisions of the Acts shall control.
Section 16. RELATIONSHIP OF THE PARTIES. NFS' relationship with GGI
shall be that of independent contractor and nothing in this Agreement shall be
construed as creating the relationship of employer and employee between GGI and
NFS or the officers, employees or agents of NFS or the relationship of a
partnership or joint venture between the parties. GGI shall exercise no control
over NFS' staff or operations and shall have no authority to incur any expense
or obligation on behalf of NFS.
Section 17. NOTICES. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if (a) personally
delivered; (b) sent by registered or certified mail, postage prepaid; (c)
transmitted by fax with confirmation by first class mail, postage prepaid; or
(d) delivered by a nationally recognized overnight courier service, addressed by
the party giving notice to the other party at the address set forth below or at
such other address as such party may from time to time specify in writing to the
other party pursuant to this Section 17. Any payments required hereunder shall
also be made to the following addresses, unless notice is given of a change of
address:
If to NFS:
Nationwide Financial Services, Inc.
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxxx
Senior Vice President-Finance
Fax Number: 000-000-0000
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With a copy to:
Nationwide Office of General Counsel
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Vice President-Associate General Counsel
Fax Number: 000-000-0000
If to GGI:
Gartmore Global Investments
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Vice President-Chief Financial Officer
Fax Number: 000-000-0000
With a copy to:
Gartmore Global Investments
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Legal Department
Fax Number: 000-000-0000
Section 18. AMENDMENT. This Agreement may be modified or amended only
by mutual written agreement of the parties.
Section 19. WAIVER AND ILLEGALITY. The waiver by any party of any
provision of this Agreement or any breach by any other party of any provision of
this Agreement shall not constitute a continuing waiver or waiver of such
provision for any subsequent breach of the same or of a different provision of
this Agreement. In the event that any provision or provisions of this Agreement
are deemed void, such provisions shall be deemed severed from this Agreement and
the remaining provisions of this Agreement shall continue to remain in full
force and effect, and there shall be substituted a provision of similar import
reflecting the original intent of the parties to the extent permissible under
applicable law.
Section 20. HEADINGS. The descriptive section headings used in this
Agreement have been inserted for convenience of reference only and do not define
or limit the provisions hereof, and are not to be used to construe or interpret
this Agreement. All references to Sections are references to Sections of this
Agreement.
Section 21. ENTIRE CONTRACT. This Agreement (including all schedules
hereto) and the Fund Agreements (including all schedules and exhibits thereto)
contain all of the terms and
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conditions agreed upon by the parties and supersede all prior or contemporaneous
agreements of the parties, oral or written, regarding the subject matter hereof.
Section 22. ASSIGNMENT. This Agreement shall inure to the benefit of
and be binding upon each party's successors and permitted assigns. Neither party
shall assign this Agreement without the prior written consent of the other
party, such consent not to be unreasonably withheld or delayed; provided
however, that NFS may assign this Agreement to any of its subsidiaries or
affiliated entities without the consent of GGI.
Section 23. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument, notwithstanding that all parties
are not signatories to the original or the same counterpart or that signature
pages from different counterparts are combined.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first above written.
GARTMORE GLOBAL INVESTMENTS, INC.
By: ________________________________________
Name:
Title:
NATIONWIDE FINANCIAL SERVICES, INC.
By: ________________________________________
________________________________
Name:
Title:
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SCHEDULE A
FUNDS AGREEMENTS
1. Fund Agreement, dated August 1, 2001 by and among Nationwide Financial
Services, Inc. and its affiliates and/or subsidiaries listed on Exhibit
A to such agreement, Villanova Mutual Fund Capital Trust and Nationwide
Advisory Services.
2. Fund Agreement, dated August 1, 2001 by and among Nationwide Financial
Services, Inc. and its affiliates and/or subsidiaries listed on Exhibit
A to such agreement, Villanova Mutual Fund Capital Trust, Xxxxxx
Capital Management, Inc. and Nationwide Advisory Services.
A-1
SCHEDULE B
REPRESENTATION OF GGI PRODUCTS ON CURRENT
NFS INVESTMENT PRODUCT MENUS AND PLATFORMS
B-1
